The idea of taxing financial transactions is an irrelevant one for the UK banking sector and a distraction from the focus of getting banks lending again and building their capital buffers, Richard Lambert, director-general of the Confederation of British Industry.

Lambert was referring to comments made by Adair Turner, chairman of the Financial Services Authority in a magazine interview published last week, that if tougher capital rules don't prevent excess pay, profits and risk-taking by banks, the UK should consider applying special taxes on financial transactions.

"The trouble is...that the headlines Lord Turner has generated are about the wrong issues," said Lambert at a CBI annual dinner in Gateshead, in the North East of the UK.

The CBI chief said the right questions to ask are how to get credit flowing back to the private sector, especially small and medium-sized businesses, and what kind of "shock absorbers" banks need to be able to stand on their own without taxpayer help.

"In a free society, its not the job of a politician or, for that matter, of a regulator to argue that a particular form of activity is or is not of social value," said Lambert, who added that he is not in favour of a tax on financial deals.

The CBI chief said it would be madness to impose a transaction tax in one country without the rest of the world doing the same, and, because there's no chance of that happening, it's not a debate worth engaging in.

Lambert also told businessman at the dinner that business conditions in the UK remain tough and there are question marks hanging over the medium-term outlook for a still-fragile economy, although he said the outlook has brightened over recent months.

"It seems to me that, in a number of respects, the outlook has brightened somewhat over the summer months," he said. "At least it no longer feels, as it did in the early months of the year, that the wheels are falling off the British economy."